The 30-share Sensex declined to 16,037.60 in the opening trade but recovered to close higher by 34.74 points at 16,189.36.

Broader NSE Nifty edged up 7.90 to close at 4,873.90 points.

Brokers said headline inflation falling to a two-year low of 7.47 per cent in December strengthened the hope that the Reserve Bank will cut lending rates in near future.

Markets,however,remained under pressure following a a weak trend in the Asian region and lower opening in Europe after Standard and Poor¿s stripped France of its top credit rating and cut rating of eight other euro-zone nations.

The uptrend was mostly supported by stocks in capital goods,IT,teck and auto sectors. Capital goods sector gained the most at 2.07 per cent by IT at 1.80 per cent.

Infosys was up by 1.88 per cent,TCS by 1.91 per cent to and Wipro 1.57 per cent.